Mealey's Franchise : Mealey's : Legal News & Analysis

Mealey's Franchise

December 08, 2020
Burger King Employees Ask 11th Circuit To Revive Suit Over Franchisee Hiring Ban

ATLANTA — An agreement between Burger King corporate and its franchisees not to recruit or hire each other’s employees led to depressed workers’ wages, three employees argue to the 11th Circuit U.S. Court of Appeals in a Nov. 30 brief, seeking to reverse a lower court’s dismissal of a proposed class complaint (Jarvis Arrington, et al. v. Burger King Worldwide, Inc., et al., No. 20-13561, 11th Cir.).
December 07, 2020
Federal Judge Explains Partial Judgment For 7-Eleven At 1st Circuit’s Request

BOSTON — At the request of the First Circuit U.S. Court of Appeals, a federal judge in Massachusetts followed up his entry of partial judgment in favor of 7-Eleven Inc. with a memorandum and order on Dec. 2, explaining there is little overlap between the issues disposed of and those that remain pending in four franchise workers’ action over their alleged misclassification as contractors (Dhananjay Patel, et al. v. 7-Eleven Inc., No. 17-11414, D. Mass., 2020 U.S. Dist. LEXIS 225628).
December 04, 2020
Missouri Federal Judge Stays Franchise Trademark Dispute Pending State Court Ruling

ST. LOUIS — In a dispute over two franchises’ unauthorized use of a window distributor’s trademarks, a Missouri federal judge on Nov. 30 stayed the litigation pending a ruling on the scope of the company’s trademark license by a North Carolina state court. However, the judge agreed to dismiss false advertising and trademark dilution claims, as well as claims against a franchise employee (Window World International LLC, et al. v. Jill O’Toole, et al., No. 4:19-2363, E.D. Mo., 2020 U.S. Dist. LEXIS 223071).
December 03, 2020
Washington Court: Former Car Dealership Owners Not Entitled To Settlement Funds

TACOMA, Wash. — Previous owners of a Volkswagen dealership were not entitled to payments from a class action settlement over the company’s emissions violations under the terms of the parties’ purchase and sales agreement, a Washington appeals court held Nov. 24, affirming a trial court ruling (Rodney R. Parr, et al. v. Haselwood Imports Inc., No. 53640-4-II, Wash. App., Div. 2, 2020 Wash. App. LEXIS 3085).
December 03, 2020
Domino’s Franchisee Worker Asks U.S. High Court To Consider Arbitration Question

WASHINGTON, D.C. — In a Nov. 16 petition for a writ of certiorari, an employee of a Domino’s franchisee asks the U.S. Supreme Court to take up his appeal and rule that “clear and unmistakable evidence” must exist in an arbitration agreement for a court to find that the parties agreed that an arbitrator rather than the court will decide questions of arbitrability (Derek Piersing, et al. v. Domino’s Pizza Franchising LLC, et al., No. 20-695, U.S. Sup.).
December 02, 2020
Reconsideration Denied, Summary Judgment Granted In Cleaners’ Wage Class Suit

FRESNO, Calif. — In a trio of orders issued Nov. 25 and Nov. 30, a federal judge in California declined to reconsider a January order granting summary judgment to three of the five defendants in a wage class suit brought by home cleaners, granted summary judgment to a fourth defendant and approved the cleaners’ class notice plan as they move forward with their claims against the remaining defendant, a cleaning company franchisee (Angela Cruz, et al. v. MM 879, Inc., et al., No. 15-1563, E.D. Calif., 2020 U.S. Dist. LEXIS 221722).
December 01, 2020
Insureds Oppose Insurer’s High Court Appeal Of Employment Practices Coverage Suit

WASHINGTON, D.C. — Insureds on Nov. 19 filed an opposition to an insurer’s petition asking the U.S. Supreme Court to review a Montana Supreme Court ruling that a lower court properly exercised personal jurisdiction over the insurer under Montana's long-arm statute and the due process clause of the 14th Amendment in the insureds’ lawsuit seeking coverage for an underlying class action employment dispute, challenging the insurer’s “new argument” that the high court should accept the writ of certiorari because the novel coronavirus “has introduced uncertainty into the insurance industry” (Philadelphia Indemnity Insurance Company v. Gateway Hospitality Group Inc., et al., No. 20-515, U.S. Sup.).
November 25, 2020
Franchisees Could Not Have Relied On Alleged Misrepresentations, Judge Says

RALEIGH, N.C. — A federal judge in North Carolina on Nov. 23 awarded summary judgment to three men who formed a hot dog and barbeque franchise, finding that two area franchisees and an individual franchisee could not establish that they reasonably relied on allegedly misleading statements in the franchise brochure and marketing materials because the documents did not influence the plaintiffs’ decision to enter into franchise agreements (Trident Atlanta LLC, et al. v. Charlie Graingers Franchising LLC, et al., No. 18-10, E.D. N.C., 2020 U.S. Dist. LEXIS 218836).
November 24, 2020
Virus Exclusion Bars Coverage For Losses Incurred By Novel Coronavirus

PHOENIX — An insured’s suit against its businessowners insurer cannot proceed because no coverage is afforded for losses sustained as a result of shutdown orders issued as a result of the novel coronavirus, an Arizona federal judge said Nov. 20 in determining that the policy’s virus exclusion clearly precludes coverage for the losses (Border Chicken AZ LLC v. Nationwide Mutual Insurance Co., et al., No. 20-785, D. Ariz., 2020 U.S. Dist. LEXIS 217649).
November 24, 2020
Judge Partially Grants Tax Franchisor’s Motion For Default Judgment

NEW YORK — A federal judge in New York on Nov. 20 granted in part an income tax franchisor’s motion for default judgment, ruling that while the plaintiff established claims for breach of contract, misappropriation of trade secrets, trademark infringement and false designation of origin, the franchisor was unable to establish liability for trademark dilution and is not entitled to damages and attorney fees (JTH Tax Inc., et al. v. Pawanmeet Sawahney, No. 19-4035, S.D. N.Y., 2020 U.S. Dist. LEXIS 217977).
November 23, 2020
Jack In The Box Settles Claims Over Marketing Fund Access, Disclosures

SAN DIEGO — In a Nov. 10 court filing in the San Diego County Superior Court, Jack in the Box Inc. (JIB) and an association representing nearly 85 percent of all JIB franchises revealed that they have reached a settlement in their dispute over access to a $180 million marketing fund (National Jack in the Box Franchise Association v. Jack in the Box Inc., No. 37-2019-00031267-CU-BC-CTL, Calif. Super., San Diego Co.).
November 20, 2020
Franchise Groups Challenge Calif. Independent Contractor Test’s Constitutionality

SAN DIEGO — Four franchising-related groups filed a complaint on Nov. 17 in a federal court in California challenging the constitutionality of California’s “ABC Test” used for determining whether a worker is an employee or independent contractor and calling it “irreconcilable” with laws regulating franchising (International Franchise Association, et al. v. California, et al., No. 20-2243, S.D. Calif.).
November 13, 2020
Current McDonald’s Franchisees Sue Franchisor For Race Discrimination

CHICAGO — McDonald’s history of discrimination against Blacks that began when the franchise system started in 1955 and Blacks were not permitted to be franchisees continues today, with the franchisor steering Black franchisees to underperforming Black neighborhoods where it charges them higher rents, forces them to pay for renovations or rebuilds and then forces them out when they can’t keep up with the costs, two current franchisees allege in an Oct. 29 class complaint filed in an Illinois federal court (James Byrd, Jr., et al. v. McDonald’s USA, LLC, et al., No. 20-6447, N.D. Ill.).
November 12, 2020
Michigan Federal Judge: Franchisee Entitled To Fee Return, Nothing Else

DETROIT — In Nov. 6 findings of fact and conclusions of law, a federal judge in Michigan largely rejected the positions advanced at a January bench trial by a plaintiff franchisee, including allegations of fraudulent inducement and negligent misrepresentation leveled against a former franchisor (MTR Capital LLC v. LaVida Massage Franchise Development Inc. et al., No. 17-13552, E.D. Mich., 2020 U.S. Dist. LEXIS 208061).
November 10, 2020
Judge Denies Franchisees’ Motion For TRO, Construes As Preliminary Injunction Motion

SACRAMENTO, Calif. — A federal judge in California on Nov. 5 denied a motion for a temporary restraining order brought by small businesses and franchisees against the seller of bone density improvement center franchises and construed the motion as one for a preliminary injunction in their lawsuit alleging fraud, negligent misrepresentation, unjust enrichment, violation of California’s unfair competition law (UCL) and other claims (John P. Baird, et al. v. OsteoStrong Franchising, LLC, et al., No. 20-cv-02010, E.D. Calif., 2020 U.S. Dist. LEXIS 208500).
November 09, 2020
Secretary Of Labor, Groups Will Appeal Joint Employment Ruling

NEW YORK — The U.S. secretary of Labor and trade groups separately filed notices on Nov. 6 in the U.S. District Court for the Southern District of New York that they will appeal a Sept. 8 ruling deeming the portions of the U.S. Department of Labor’s (DOL) final rule revising its regulations interpreting vertical joint employer liability as “arbitrary and capricious,” in conflict with the Fair Labor Standards Act (FLSA) and “flawed in just about every respect” (New York, et al. v. Eugene Scalia, et al., No. 20-1689, S.D. N.Y.).
November 09, 2020
Supplemental Class Notice Via Text Message Ordered In TCPA Settlement

CHICAGO — A federal magistrate judge in Illinois on Nov. 3 denied final class settlement approval in a Telephone Consumer Protection Act (TCPA) suit due a small number of claims and ordered supplemental class notice via text message, opining that those texts will not violate the federal law (Madeleine Yates, et al. v. Checkers Drive-In Restaurants, Inc., et al., No. 17-9219, N.D. Ill., 2020 U.S. Dist. LEXIS 205241).
November 09, 2020
Wendy’s Franchisee Pays Penalty After DOL Finds Child Labor Violations

EDGEWOOD, Ky. — Sinkula Investments Ltd. Co., which operates 10 Kentucky Wendy’s franchise locations, paid $16,160 for violating child labor requirements of the Fair Labor Standards Act (FLSA), the U.S. Department of Labor Wage and Hour Division (WHD) announced Nov. 6.
November 09, 2020
T-Mobile Retailer Will Pay $175,000 To End EEOC Disability Bias Suit

TACOMA, Wash. — A federal judge in Washington on Oct. 27 approved a consent decree reached between Northwest Wireless Enterprises LLC, an exclusive T-Mobile retailer, and the Equal Employment Opportunity Commission, under which the employer will pay $175,000 to end claims that it discriminated against a worker with a hearing impairment (Equal Employment Opportunity Commission, et al. v. Northwest Wireless Enterprises, LLC, No. 19-5696, W.D. Wash.).
November 05, 2020
Insurer’s Coronavirus Suit Is ‘Classic Example’ Of Proper Abstention, Judge Says

CHICAGO — A federal judge in Illinois on Nov. 3 dismissed a commercial property insurer’s lawsuit seeking a declaration that it has no duty to provide business interruption coverage for 31 restaurant insureds’ alleged losses arising from public health orders that restricted public gatherings in an effort to slow the spread of the novel coronavirus, noting that allowing the insurer’s case to proceed “would ‘be indulging in gratuitous interference’” with the insureds’ competing Ohio state lawsuit (State Auto Property and Casualty Insurance Co. v. Classic Dining Group LLC, et al., No. 20-04434, N.D. Ill.).
November 03, 2020
Hotel Franchisor Removes Class Suit Over Promised Revenue, Files Counterclaims

DALLAS — A hotel franchisor accused by a proposed class of franchisees of using the novel coronavirus pandemic as a cover for fraudulently revoking its promise of minimum revenues removed the complaint to a federal court in Texas on Oct. 28 and then filed counterclaims against the two named franchisees for failing to pay fees for terminating their contracts early (Shree Veer Corporation, et al. v. OYO Hotels, Inc., No. 20-3268, N.D. Texas).
October 28, 2020
Split 9th Circuit Tosses Ruling Denying Franchisee’s Motion To Reopen Class Action

PASADENA, Calif. — A 2-1 Ninth Circuit U.S. Court of Appeals panel on Oct. 21 overturned a federal judge in California’s denial of a franchisee’s motion to reopen his class action suit against a franchisor over his alleged misclassification as an independent contractor rather than an employee, holding that the judge should reconsider the decision and apply the ruling in Henson v. Fidelity National Financial Inc. (Sergio Gonzalez, et al. v. Coverall North America Inc., No. 19-55511, 9th Cir., 2020 U.S. App. LEXIS 33216).
October 27, 2020
D.C. Circuit Sends Union Dispute Back To NLRB For Further Explanation

WASHINGTON, D.C. — The District of Columbia Circuit U.S. Court of Appeals on Oct. 23 declined to enforce a decision by the National Labor Relations Board in a union representation dispute with a Chicago-area hotel operator and remanded with instructions that the NLRB distinguish its precedents (Davidson Hotel Company, LLC v. National Labor Relations Board, No. 19-1235, D.C. Cir., 2020 U.S. App. LEXIS 33394).
October 27, 2020
Divided Panel Upholds Widow’s Award In Dispute Against Domino’s

DAYTONA BEACH, Fla. — The Fifth District Florida Court of Appeal on Oct. 23 summarily affirmed an $8.9 million award in favor of the widow of a man who died in an automobile accident caused by a Domino’s Pizza delivery driver; in a dissent, one judge indicated that he would instead reverse because Florida’s standard jury instruction on agency “does not adequately account for a franchise relationship” (Domino’s Pizza LLC v. Yvonne Wiederhold, No. 5D19-2343, Fla. App., 5th Dist., 2020 Fla. App. LEXIS 15080).
October 27, 2020
McDonald’s: Claims Of Bias Against Black Former Franchisees Are Without Merit

CHICAGO — Former black franchisees who have sued alleging that McDonald’s has “a decades-long history of racial discrimination” have made only vague claims of practices undermining franchisees that are “illogical” and also “untimely and inconsistent with the plain language of the contracts they signed,” McDonald’s USA LLC and McDonald’s Corp. (together, McDonald’s) argue in a motion to dismiss filed Oct. 23 in a federal court in Illinois (Christine Crawford, et al. v. McDonald’s USA, LLC, et al., No. 20-05132, N.D. Ill.).